The worksheets on the following pages are provided to help you figure the adjusted basis of your home; your gain or (loss), exclusion, and taxable gain on the sale of your home; and the reduced maximum exclusion. Keep any completed worksheets with your tax records; do not submit them with your tax return.

Worksheet 1 Instructions. Adjusted Basis of Home Sold

If you use Worksheet 1 to figure the adjusted basis of your home, follow these instructions.

IF...

THEN...

you inherited your home

1

skip lines 1–4 of the worksheet.

2

find your basis using the rules under Home received as inheritance. Enter this amount on line 5.

3

fill out lines 6–13.

you received your home as a gift

1

read Home received as gift and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate.

2

if you can add any federal gift tax to your basis, enter that amount on line 5.

3

fill out lines 6–13.

you received your home as a trade for other property

1

enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119.)

2

fill out lines 2–13.

you built your home

1

add the purchase price of the land and the cost of building the home. See Construction. Enter that total on line 1 of the worksheet. (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119.)

2

fill out lines 2–13.

you received your home from your spouse after July 18, 1984

1

skip lines 1–4 of the worksheet.

2

enter on line 5 your spouse's adjusted basis in the home just before you received it.

3

fill out lines 6–13, including adjustments to basis only for events after the transfer.

you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984

fill out one worksheet, including adjustments to basis for events both before and after the transfer.

you received your home from your spouse before July 19, 1984

1

skip lines 1–4 of the worksheet.

2

enter on line 5 the home's fair market value at the time you received it.

3

fill out lines 6–13, including adjustments to basis only for events after the transfer.

you owned a home jointly with your spouse, who transferred his or her interest in the home to you before July 19, 1984

1

fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the transfer.

2

multiply the amount on line 13 by 50% (.50) to get the adjusted basis of your half-interest at the time of the transfer.

3

multiply the fair market value of the home at the time of the transfer by 50% (.50). Generally, this is the basis of the half-interest that your spouse owned.

4

add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet.

5

complete lines 6–13 on the second worksheet, including adjustments to basis only for events after the transfer.

you owned your home jointly with a nonspouse

1

fill out lines 1–13 of the worksheet.

2

multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest.

Worksheet 1 Instructions. Adjusted Basis of Home Sold(Continued)

fill out lines 1–13 of the worksheet, including adjustments to basis only for events before your spouse's death.

2

multiply the amount on line 13 by 50% (.50) to get the adjusted basis of your half-interest on the date of death.

3

multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by 50% (.50). This is the basis for your spouse's half-interest.

4

add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet.

5

complete lines 6–13 on the second worksheet, including adjustments to basis only for events after your spouse's death.

you owned your home jointly with your spouse who died before the sale, and your permanent legal home is in a community property state

1

skip lines 1–4 of the worksheet.

2

enter the basis of the home on line 5. Generally, this is the total fair market value of the home at the time of death. (See Community property.)

3

fill out lines 6–13, including adjustments to basis only for events after your spouse's death.

you owned your home jointly with a nonspouse who died before the sale

1

fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death.

2

multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death.

3

multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. This is the basis for the co-owner's part-interest.

4

add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet.

5

complete lines 6–13 on the second worksheet, including adjustments to basis only for events after the co-owner's death.

your home was ever damaged as the result of a casualty

1

in addition to lines 6–13, including other lines of the worksheet you may need to fill out, on line 8 enter any amounts you spent to restore the home to its condition before the casualty.

2

on line 11 enter:

any insurance reimbursements you received (or expect to receive) for the loss, and

Worksheet 1. Adjusted Basis of Home Sold

Caution:See the Worksheet 1 Instructions before you use this worksheet.

1.

Enter the purchase price of the home sold. (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119.)

1.

2.

Seller-paid points for home bought after 1990 (see Seller-paid points). Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1

2.

3.

Subtract line 2 from line 1

3.

4.

Settlement fees or closing costs (see Settlement fees or closing costs). If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a–4g and 5; go to line 6.

a.

Abstract and recording fees

4a.

b.

Legal fees (including fees for title search and preparing documents)

4b.

c.

Survey fees

4c.

d.

Title insurance

4d.

e.

Transfer or stamp taxes

4e.

f.

Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions)

4f.

g.

Other

4g.

5.

Add lines 4a through 4g

5.

6.

Cost of additions and improvements. Do not include any additions and improvements included on line 1

6.

7.

Special tax assessments paid for local improvements, such as streets and sidewalks

7.

8.

Other increases to basis

8.

9.

Add lines 3, 5, 6, 7, and 8

9.

10.

Depreciation allowed or allowable, related to the business use or rental of the home

Gain or (loss) on the sale. Subtract line 4 from line 3. If this is a loss, stop here

5.

Part 2. Exclusion and Taxable Gain

6.

Enter any depreciation allowed or allowable on the property for periods after May 6, 1997.If none, enter -0-

6.

7.

Subtract line 6 from line 5. If the result is less than zero, enter -0-

7.

8.

Aggregate number of days of nonqualified use after 12/31/2008

8.

9.

Number of days taxpayer owned the property

9.

10.

Divide the amount on line 8 by the amount on line 9. Enter the result as a decimal (rounded to at least 3 places). But do not enter an amount greater than 1.00

10.

11.

Gain allocated to nonqualified use. (Line 7 multiplied by line 10)

11.

12.

Gain eligible for exclusion. Subtract line 11 from line 7.

12.

13.

If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion). If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. If you do not qualify to exclude gain, enter -0-

13.

14.

Exclusion. Enter the smaller of line 12 or line 13

14.

15.

Taxable gain. Subtract line 14 from line 5. Report your taxable gain as described under Reporting the Sale. If the amount on this line is zero, do not report the sale or exclusion on your tax return. If the amount on line 6 is more than zero, complete line 16

15.

16.

Enter the smaller of line 6 or line 15. Enter this amount on line 12 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D (Form 1040)

Worksheet 3. Reduced Maximum Exclusion

Enter the number of days (or months) that you used the property as a main home during the 5-year period* ending on the date of sale

2a.

b.

Enter the number of days (or months) that you owned the property during the 5-year period* ending on the date of sale. If you used days on line 2a, you also must use days on this line and on lines 3 and 5. If you used months on line 2a, you also must use months on this line and on lines 3 and 5. (If married filing jointly and one spouse owned the property longer than the other spouse, both spouses are treated as owning the property for the longer period.)

b.

c.

Enter the smaller of line 2a or 2b

c.

3.

Have you (or your spouse, if filing jointly) excluded gain from the sale of another home during the 2-year period ending on the date of this sale?

□ No. Skip line 3 and enter the number of days (or months) from line 2c on line 4. □ Yes. Enter the number of days (or months) between the date of the most recent sale of another home on which you excluded gain and the date of sale of this home

3.

4.

Enter the smaller of line 2c or 3

4.

5.

Divide the amount on line 4 by 730 days (or 24 months). Enter the result as a decimal (rounded to at least 3 places). But do not enter an amount greater than 1.000

5.

6.

Multiply the amount on line 1 by the decimal amount on line 5

6.

7.

Reduced maximum exclusion. Add the amounts in columns (a) and (b) of line 6. Enter it here and on Worksheet 2, line 13